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| - For Investments purpose, we often wait to collect a large amount of money and invest it all at once. These investments are done to achieve our future goals like buying a house, child's education, marriage or retirement planning. However recurring household expenses always erode the money which we would have otherwise kept for investments and the result - we end up compromising on our financial goals. So,in order to get the dual benefits of investment and that too of small amount periodically, we have Systematic Investment Plans(SIP). Systematic Investment Plan (SIP) is a Financial Planningtool that allows you to inveinvest in mutual funds through small, periodic installments. Moreover you can also select the tenure of your investments & it helps you set aside a fixed amount every month for investments thus contributing towards your financial goals. In other words, it is a vehicle offered by mutual funds to help you save regularly. An SIP makes you disciplined in your savings. Every month you are forced to keep aside a fixed amount. A SIP is designed to beat the high's and low's of the market and provide stability to the investment. Through an SIP, an investor pledges to invest a fixed amount of money on a monthly basis in a mutual fund scheme for a predetermined time period. Also SIP provides the investor with the flexibility to increase the amount of his monthly installment at any time. Investments do not necessarily mean that one has to collect a substantial chunk of money to invest. One can start investing with a very small amount through an SIP. When we think monthly installments, we generally think of one more date to remember apart from the bill payment dates. That is not the case with an SIP. You have the convenience of direct debit of your SIP installments through Electronic Clearing Service (ECS) facility. Your SIP amount automatically gets debited from your bank account on the predetermined date. Getting rich is simpler than you think, here's a simple formula to get rich: Systematic investing has a compounding effect on your investments. In the long term, an investment as low as Rs 5000/- per month swells up into a huge corpus. If an investor starts early, even with lower invested amount he can create a large corpus. Every investor dreams of purchasing stocks at a low price and selling it at a higher price. But, how does one know whether any given time is the right time to buy or sell? Many retail investors try to judge the market movements and end up losing their money in the long term. A more successful strategy is 'Rupee Cost Averaging' wherein you invest a fixed amount regularly. Thus you purchase more when the prices are low and purchase less when the prices are high. So you tide over all the ups and downs of the market without any drastic losses. SIP investments take advantage of this strategy. In the long term, the SIP investor gains as his investments are unaffected by market volatility. Equity gives the best inflation adjusted return among all asset classes over a long period of time. It is the only asset class which gives positive inflation adjusted return against all other asset classes. It is also evident that in the long term, equity investments will help outperform various other investment avenues and will also help in beating inflation by a huge margin.
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